THE CHALLENGES OF PENSION MANAGEMENT IN NIGERIA


THE CHALLENGES OF PENSION MANAGEMENT IN NIGERIA
INTRODUCTION
A pension is a fixed sum to be paid regularly to a person, typically following retirement from service. There are many different types of pensions, including defined benefit plans, defined contribution plans, as well as several others. Pensions should not be confused with severance pay; the former is paid in regular installments, while the latter is paid in one lump sum.
The terms retirement plan and superannuation refer to a pension granted upon retirement of the individual. Retirement plans may be set up by employers, insurance companies, the government or other institutions such as employer associations or trade unions. A pension created by an employer for the benefit of an employee is commonly referred to as an occupational or employer pension. Labor unions, the government, or other organizations may also fund pensions. Occupational pensions are a form of deferred compensation, usually advantageous to employee and employer for tax reasons. Many pensions also contain an additional insurance aspect, since they often will pay benefits to survivors or disabled beneficiaries. Other vehicles (certain lottery payouts, for example, or an annuity) may provide a similar stream of payments.
The common use of the term pension is to describe the payments a person receives upon retirement, usually under pre-determined legal or contractual terms. A recipient of a retirement pension is known as a pensioner or retiree.
TYPES OF PENSIONS IN NIGERIA.
Retirement plan
A retirement plan is an arrangement to provide people with an income during retirement when they are no longer earning a steady income from employment. Often retirement plans require both the employer and employee to contribute money to a fund during their employment in order to receive defined benefits upon retirement. It is a tax deferred savings vehicle that allows for the tax-free accumulation of a fund for later use as a retirement income. Funding can be provided in other ways, such as from labor unions, government agencies, or self-funded schemes. Pension plans are therefore a form of “deferred compensation”.
Some countries also grant pensions to military veterans. Military pensions are overseen by the government; an example of a standing agency is the United States Department of Veterans Affairs. Ad hoc committees may also be formed to investigate specific tasks, such as the U.S. Commission on Veterans’ Pensions (commonly known as the “Bradley Commission”) in 1955–56. Pensions may extend past the death of the veteran himself, continuing to be paid to the widow; see, for example, the case of Esther Sumner Damon, who was the last surviving American Revolutionary War widow at her death in 1906.
Social and state pensions
Many countries have created funds for their citizens and residents to provide income when they retire (or in some cases become disabled). Typically this requires payments throughout the citizen’s working life in order to qualify for benefits later on. A basic state pension is a “contribution based” benefit, and depends on an individual’s contribution history. For examples, see National Insurance in the UK, or Social Security in the Unite States of America.
Many countries have also put in place a “social pension”. These are regular, tax-funded non-contributory cash transfers paid to older people. Over 80 countries have social pensions. Some are universal benefits, given to all older people regardless of income, assets or employment record. Examples of universal pensions include New Zealand Superannuation and the Basic Retirement Pension of Mauritius. Most social pensions, though, are means-tested, such as Supplemental Security Income in the United States of America or the “older person’s grant” in South Africa.
Disability pensions
Some pension plans will provide for members in the event they suffer a disability. This may take the form of early entry into a retirement plan for a disabled member below the normal retirement age.
CHALLENGES OF PENSION MANAGEMENT IN NIGERIA
One major challenge to be faced by the pensions industry will be the issue of pension fund governance. Private pension’s plans or retirement savings accounts function on the basis of agency relationships between plan members and beneficiaries and the persons or entities involved in the administration or financing of the pension plan, such as the plan sponsor and the plan administrator on the other. Governance provides the structure through which the objectives of a pension plan are set and the means of attaining those objectives and monitoring performance.

Typical governance issues which will apply range include having in place a governing body, identification of responsibilities, custodian, internal controls, and disclosure to members, redress and accountability.

Over the years the management of pension scheme in Nigeria has been inundated by multiple and diverse problems arising from which retirement became dreaded by workers especially in the public service. The failures of pension schemes in the country have been attributed to poor pension fund administration, outright corruption; embezzlement of pension fund; inadequate build-up of funds and poor supervision. There have been several reviews of pension schemes by the federal government which have also caused implementation problems.
METHODOLOGY
This study deals with methodology adopted in carrying out an effective study. The methodology adopted is discussed under the following sub-heading; Research design, Population, Sample and sampling techniques, Instrumentation, Validity, Reliability, Administration of instrument and methods of data analysis.
RESEARCH DESIGN
The research design to be adopted for this study will be the descriptive survey research design. This design is adopted because the study deals with or intends to put the options of a sample population and use the findings obtained to refer to the whole population.
POPULATION OF THE STUDY.
The population for this study will comprises of several pensioners in Nigeria.
SAMPLE AND SAMPLING TECHNIGUES
A total of 20 pensioners will be randomly selected. A sample of household questionnaire as well one respondent will be selected The researcher made use of the stratified sampling technique in arriving at this.
INSTRUMENTATION.
The instrument that will be used for this study will be self-designed item questionnaire titled, “challenges of pension management” (CPM). The instrument will be structured into two sections A and B. section A will be used to get a demographic details of respondents, while section B will be used for gathering answers to the questionnaire. The questionnaire will contain questions and will be adopted on the modified 4-point likert scale of;

Strongly Agree SA- 4points
Agree A- 3points
Disagree D- 2points
Strongly Disagree SD- 1point
VALIDITY
In order to ensure the validity of the instrument, a draft copy will be submitted for scrutiny so as to ascertain the appropriateness of the language used. Corrections, modifications and amendment made by the supervisor will be used to enhance the content and validity of the instrument.
RELIABILTY
To ascertain the reliability of the instrument, the test re-test approach will be adopted.
ADMINISTRATION OF INSTRUMENT
The researcher will personally administer the instrument to the respondent.
METHOD OF DATA ANALYSIS
The data collected will be collated and computed with the use of mean and rank order to analyses the researcher questions. The data obtained will be presented in approaches of weighted mean. For the analysis, items were calculated as stated above. Any score below 2.5 after calculation of the mean would be rejected and above 2.5 will be accepted.

QUESTIONNAIRES
PENSIONER MINISTRY PROBLEMS FACED
RETIRER A: MIN, OF WORKS LATE GRATUITY PAYMENT
RETIRER B: MIN OF FINANCE FACE WITH THE
CHALLENGES OF BRIBERY OF CORRUPTION AT THE PENSION BOARD.
RETIRER C: MIN OF WOMEN AFFAIRS WE ARE FACE WITH THE
CHALLENGES OF DELAY IN PAAYMENT OF GRATUITY
RETIRER D: MIN OF BUDGET/PLANNING WE ARE FACED WITH
THE CHALLENGES OF DELAY IN PROCESSING OF RETIREMENT DOCUMENT FROM THE PENSION BOARD.
RETIRER E: MIN OF WATER RESOURCES WE ARE FACED WITH
ILLEGAL DEDUCTIONS FROM OUR PENSION FUNDS

CONCLUSION
To summarize, the challenges of pension management in the country need to be designed under the guidance of the overriding objective that pension funds are set up to serve as a secure source of funds for retirement benefits. Pension fund governance will be critical to Nigeria’s move to a successful defined contributions pension’s model.

The challenge of pension management provision has only just began. Numerous stakeholders all have a role to play. From the government which sets out the regulatory framework to the regulator PENCOM, to financial institutions who will manage and administer contributions, to individuals who need to pay enough into their account to employers who must also contribute an adequate amount for their employees.

The importance of pension provision in Nigeria will continue to grow as individuals begin to place less reliance on family to look after them in old age and begin to face the reality that they need to look after themselves by building a nest egg for the future.

REFERENCES
1. Lemke and Lins, ERISA for Money Managers, §1:1 (Thomson West, 2013 ed.).
2. Princeton WordNet, http://wordnetweb.princeton.edu/perl/webwn?s=superannuation, viewed 24 December 2008
3. “Industry SuperFunds – Home”. Industrysuper.com. Retrieved 2010-09-17.
4. HelpAge International Pension watch country fact file http://www.pension-watch.net/country-fact-file/
5. The Ministry of Social Development: New Zealand Superannuation http://www.workandincome.govt.nz/individuals/a-z-benefits/nz-superannuation.html
6. Larry Willmore, Universal Pensions in Mauritius, April 2003 http://ssrn.com/abstract=398280
7. “Old age pension”. GCIS. Retrieved 7 April 2013.
8. “Private Pensions/Les pensions privées” (PDF). Retrieved 2010-09-17.
9. Lemke and Lins, ERISA for Money Managers, §1:2 (Thomson West, 2013 ed.).
10. “The Pensions Advisory Service”. The Pensions Advisory Service. Retrieved 2010-09-17.

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